Philippine Stock Market is Number 1 in the World

We are Number 1 in the World!

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I would like to begin this article by applauding the stellar performance of the Philippine Stock Market during the 1^st half of 2012 (January to June period) posting a year to date return of 19%. Moreover, we should be extremely proud of the fact that in the global arena, our Philippine Stock Market has been able to put up the greatest show in comparison to the biggest stock exchanges in the Americas, Europe and Asia. The below table will show that we are the number 1 stock market in the world as against other exchanges considered as giants such as the US Dow Jones, NASDAQ, German DAX, Japan Nikkei and no other than China’s SSE:

 

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Being aware of the above numbers does not only make me proud as a citizen of our country but significantly as an investor, I have been always a firm believer that the most reliable indicator of the economy’s future performance is the stock market as it usually foretells what will happen to our economy in the next 6 to 12 months. That is the reason why my favourite companies have been gaining steam as well. Below is a ranking of my favourite companies and their YTD returns:

What the above numbers tell me is that barring any black swans or cataclysmic events like if all of a sudden a coup d’ etat ensues, another nuclear scare pops out of the picture or the entire Euro zone crumbles into recession, the Philippine Stock Market and the above companies will still outperform other markets and the above companies will continue to remain profitable. As a matter of fact, from January 2012 to June 2012, we were in the middle of various economic and fiscal crises such as the PIGS (Portugal, Italy, Greece, Spain) debt crisis, poor manufacturing data in China and the ever-increasing jobless rate in US. And yet, our country has remained resilient as manifested by the positive corporate and government performance and growth numbers.

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 The only question that I have in mind is why some of us are still on a “wait and see” mode. Foreigners are buying Philippine stocks and mutual funds and yet many locals are still putting most of their savings in banks. I am not disparaging banks but I personally believe that banks are good for short-term liquidity only, meaning, for your 6-12 monthly household expenditures or emergencies. If you have a medium to long-term time horizon, a greater portion of your retirement should be placed in long-term assets such as the stocks and mutual funds for capital growth.

I will be discussing on my next article why the slogan “It is more fun investing in the Philippines” would still hold true in the coming years. Meanwhile, may your investments continue to grow and if you have not yet started, you may contact me at anselmreyes@yahoo.com for tips and advice.

Thank you for reading this article and I hope you will share the knowledge with your family and friends.

Anselm Reyes

PS. Email me your thoughts, comments, suggestions and questions at anselmreyes@yahoo.com and for any concerns that you may have about financial literacy and investing.

For free stock market investing tips, click here http://investingphilippines.blogspot.com/ and subscribe to automatically receive my free articles.

You Will Never Be Rich Unless You Enlarge Your Psychological Wallet

Today, I am going to talk about something that will shock you. My aim is to push you beyond your money comfort zone, because unless you step out of your current money comfort zone, you will never be able to increase your wealth no matter how big the income is. So how are you going to do this? The answer is to ENLARGE YOUR PSYCHOLOGICAL WALLET.

What do I mean by PSYCHOLOGICAL WALLET?  It corresponds to your capacity to manage, grow and desire certain amount of money.  Let me ask you a question? How much money do you desire to accumulate in the future?  Is 1 million enough for you? I know people whose aim is to become a hundred millionaire and some even would like to become a multi-billionaire. Well, your answer to this is a measure of your PSYCHOLOGICAL WALLET.

I mentioned that unless you enlarge your PYSCHOLOGICAL WALLET, you will never be able to improve your financial life no matter how big your income is. Let me share with you my personal journey on how I was able to enlarge my money comfort zone.

It was year 2001, I was 21, fresh out of college I landed my first job at Asian Terminals Incorporated. My title – Management Trainee. My monthly salary  was 12,000 pesos at that time. That money was a lot for me since I was single, however, nothing was left at the end of the month.

In year 2004, I joined Harbour Centre Port Terminals Incorporated as an Assistant Manager for Planning and Documentations. My salary catapulted to 40,000 pesos per month. I had tons of money, yet, at the end of the month nothing was left again.

Year 2005, I landed in Dubai and in less than a year, I made the 6 figure per month salary. Still, at the end of the month, nada, zero, zilch, no money was left in my pocket. Bank account was depleting, fixed term deposit gets cancelled only a few months after opening.  

Some people have a 10,000 peso PSYCHOLOGICAL WALLET.  After receiving their 10,000 peso salary, they cringed, anxiety fills their mind and they splurge it. I know people who earn 10 or 20 times bigger than that and they blow it like there is no tomorrow.   

Well, I must admit, I was guilty of that. No matter how big my income was, I did not change my behavior. I did not enlarge my PSYCHOLOGICAL WALLET. When I receive my salary, I will fill my mind with the latest gadgets to buy, movies to watch, new clothes to wear etc. Don’t get me wrong, shopping, holidays and spending on something beyond the very definition of basic needs are also important for these play a role in the quality of life that each of us uniquely define. My point is, such has to be always in MODERATION.  It has to be budgeted and most importantly, it shouldn’t be sustained by DEBT.

I was 30 when I finally said “enough is enough”. Gosh! It took me 10 years to finally swallow my pride that something was wrong with the way I was managing my money. Anyway, 2 years ago, I acted with vengeance. I promised myself that I will devour every financial literacy books and attend every financial management courses and seminars available. I associated myself with people who are financially bigger than me and sought their advice. I had to completely REWIRE my BELIEF and cross-check my behavior.

At first, it was difficult because change is UNCOMFORTABLE. Who wants to be uncomfortable right?  It was a bitter pill to swallow, first, accepting my mistakes. Second, planning how to turnaround my financial life and third, executing my plans and continuously improving. Although it was difficult at first but I must tell you, it was LIBERATING.

2 years have passed since I reclaimed the steering wheel of my financial life and it has been a very wonderful ride. For the past 2 years, I had to bombard my mind with wealth beliefs and what has changed so far? Well this time, when I receive my salary at the end of the month, my past behavior has been replaced by the following:

First, I give back to God by tithing at least 10% of my salary. Initially, this was so difficult to do. I was not used to it. Giving coins is easy; perhaps, giving a 20-100 peso bill is still easy for many. But when you give 10% of your monthly income, it moves you because it is beyond your money comfort zone. But I must tell you, it is just during the initial period. Once you get the hang of it, it becomes a part of you. It is in your system. It motivates you, it inspires you to even increase your income, earn more so you can give more to God. Why tithe to God? Let me ask you, who is giving you the talents? Who is giving you the skill to earn? Who is giving you the perfect health so you can work and enjoy life? Who is blessing you financially? I realize 10% is the starting point. It is actually the cheapest when you come to think of it.

Second, I set aside 20% for my investments, and then on top of that, I also add whatever our company distributes as a bonus at the end of the financial year. Before, it used to be gadgets, sneakers, latest clothing to buy and latest movies to watch. But now, my fingers are already getting itchy before the pay day to push the buy button of the companies that I would like to buy. Today, I am ignorant when it comes to fashion. I won’t be able to answer you on what are the latest gadgets out there. But ask me what companies to buy in the Philippine Stock Market and in a blink of an eye, I can give you a full report- complete with an idea on how much your money can grow in a month or in a year’s time.

Third, I set aside 15-20% for my cash fund. This acts as my emergency fund so that when the rainy days come, I will not touch my investments. My investments are there to grow, to multiply like a snowball. My investments are solely intended for my retirement.

Thank you for reading this post and I hope you will share it with your family and friends.

Blessings,

Anselm Reyes

PS. Email me your thoughts, comments, suggestions and questions at anselmreyes@yahoo.com and for any concerns that you may have about investing in the Philippine stock market.

Who says you can’t make money in times of crisis?

Our country has reached a new milestone last Friday when the Philippines Stock Exchange Index (PSEI) closed at 5,016 points. This morning it climbed further to 5,030 points while thousands of miles away from our country, the Dow Jones Industrial Average in US shed 61.72 points and the S&P 500 index declined 6.36 points. What do these correlations tell us is that institutional and retail investors are convinced that better return on their investments await them in the Philippines.

Note that PSEI’s ascension happened in the midst of the Greek crisis which as per recent report the country will eventually succumbed to default, China downgrading their GDP forecast and the crisis in the Middle East.

The strength of our local bourse despite these crises should encourage local investors and especially, would be investors to put a portion of their money in the equities market to take advantage of the great fundamentals of many local companies.

As advised by Philequity (one of the leading investment companies in the Philippines),” STAY THE COURSE.”

“In the same way that you should invest in companies with good business and fundamentals, you should also invest in the Philippines where fundamentals are strong. If you stay with those whose fundamentals are intact, you will not be shaken out. And because companies grow and countries grow, those whose fundamentals are intact will not be derailed. Growth should be achievable in due time even in the face of so much external risks. So stay invested. Stay long and be long Philippines stocks.”

In US, Singapore, Japan and India, more than 50% of their population invests in the stock market. In our country, guess what? It is less than 1%, a meager 500,000 out of 100 million people. This is the reason why I personally believe that the 5,000 point target that was breached last week is still on the very low end. What we are seeing is just the tip of the iceberg. I wouldn’t be surprised if our index hit the 10,000 mark and this could happen in no time.

I would like to end this blog by showing you the performance of one of my favorite companies in 2011. Last year was so volatile where our market gyrated up and down for many times eg. Great rotation, Middle East crisis, Japan earthquake/tsunami/nuclear scare, Eurozone crisis, US credit rating downgrade and currently, tension at the Strait of Hormuz between US and Iran, but because of its strong fundamentals, it emerged as a winner.

Case study: Investing 10,000 pesos every month buying Ayala Land shares in 2011

 

Date	Opening price	Investment	Number of shares	Remarks
3-Jan-11	16.44	10,000	608	Middle East crisis
1-Feb-11	14.70	10,000	680	Great rotation (global stocks declined 15%)
1-Mar-11	14.36	10,000	696	Japan earthquake
1-Apr-11	15.50	10,000	645
2-May-11	16.42	10,000	609
1-Jun-11	15.46	10,000	647
1-Jul-11	15.64	10,000	639
1-Aug-11	16.80	10,000	595	US credit rating downgrade
1-Sep-11	16.00	10,000	625
3-Oct-11	14.54	10,000	688
2-Nov-11	16.00	10,000	625
1-Dec-11	16.00	10,000	625

Results:

Total amount invested = 120,000 PhP

Total number of shares bought = 7,683

Closing price of Ayala Land as of March 5, 2012 = 22.10 PhP/share

Investment value as of March 5, 2012 = 169,801 PhP

Profit = 49,801 PhP

% Return on Investment = 41.50%

The above is a proof that one can profit investing in a solid company even when there is a crisis.

Happy investing!

Anselm Reyes

PS. For financial and investment advice, you may email me at anselmreyes@yahoo.com.

Investing Successfully In The Stock Market Even During The Crisis

No long entry this time. What I would like to share with you is the strategy my mentor has taught me which is called the Peso Cost Averaging Strategy when investing in the stock market.

You must have heard about the Great Rotation during the months of February, March and April 2011 when the Philippine Stock Market sunk by as much as 20% as majority of the foreign funds shifted from emerging markets to developed markets on account of an improving US economic data.

How about the earthquake and tsunami in Japan last year?

How about the downgrading of US credit rating from AAA to AA by S&P sometime in September that resulted to a fall of world market indices including the Philippine Stock Market Index (PSEI) by 15% in one day.

Then the political crisis in the Middle East erupted, the credit contagion in the Euro-zone and the rising Chinese inflation.

All of these crisis resulted to massive sell-offs in the market that battered the Philippine Stock Market. I knew a lot of people who have lost a lot of money simply because they had followed the herd thinking that a double dip recession will occur. Infact, I was also jittery as I saw my portfolio sinking by as much as 40%. Thank God I surrounded myself with mentors who have told me that to be successful in the stock market, all you have to do is to manage two things - greed and fear. Then I recalled Warren Buffet when he said, “be greedy when everybody is fearful and be fearful when everybody is greedy”.

Another mentor of mine introduced me to the concept called Peso Cost Averaging. In layman’s term, investing equal amount buying shares of stocks every month. That is if I want to invest for example in Metrobank, all that I have to do is invest a certain amount every month for the next 12 months or so even when there is a crisis. Below is an illustration of what I actually did. I kept on buying Metrobank shares every month whether the price went up or down. 8 out of 12 months, I was buying while there was a crisis. 

 

Date	Price per share	Monthly Investment	Shares bought	Remarks
4-Feb-11	63.45	10,000	158	Great rotation worst period
3-Mar-11	59.00	10,000	169	Japanese disasters
4-Apr-11	68.45	10,000	146	Middle East political unrest
3-May-11	69.00	10,000	145	Middle East political unrest
1-Jun-11	70.00	10,000	143
1-Jul-11	71.10	10,000	141
3-Aug-11	77.20	10,000	130
5-Sep-11	74.00	10,000	135
4-Oct-11	62.60	10,000	160	US credit downgrade
3-Nov-11	69.10	10,000	145	Euro-zone credit default crisis
1-Dec-11	66.50	10,000	150	Euro-zone credit default crisis
2-Jan-12	68.45	10,000	146	Euro-zone credit default crisis
Latest closing price	81
Total capital	120,000
Total shares	1,767
Current value	142,261
Profit / loss	22,261
Growth in %	18.55

As a result, after 12 months of consistent investing, my investment grew by 18.55% per year. Definitely, not a bad return in a year that was  full of economic and political uncertainties.

Next time that there is crisis, do not immediately lose hope that life is not going to get any better.

During the crisis, I was able to earn through my investments buying Metrobank shares and so can you.

Since I have used Metrobank as an example here, I have to say that I am not connected with Metrobank nor I am encouraging you to invest in it. I must admit however, that it is one of my favorite companies the reason why I used it as an example to illustrate the benefits of peso cost averaging strategy here.

Note that investing in the stock market has certain level of risk which is unique to an individual’s investing strategies and objectives. My advise is for you to do your own due diligence first, seek the help of a financial strategist or an expert in the field.

Be blessed!

Anselm Reyes

For your questions about the stock market or any topic related to investing and financial planning, you may email me at anselmreyes@yahoo.com or alternatively, you may subscribe here to receive my free updates.

Read this to learn how to invest in the Stock Market

I am sharing my response to the query of my friend, Simon, who would like to start investing in the stock market. Why am I sharing it? Because I believe that it is the same concern a newbie investor has, it was the same concern I had when I started investing in the stock market 2 years ago. So read on and learn how you can begin and start taking charge of your financial destiny.


Bro,

Iba ka na ngayon. Successful on your field. Looking forward for stock investment maybe by 2012 or 2013. Kailangan ko ng advise mo d2. Keep in touch.

Regards
Simon

---------------------------------------------------------------------------------

Hi Simon,

Thank you for the encouraging words.

I am glad that you are interested in investing in the stock market. By doing this, you are taking full control of your financial destiny. Because of your initiative, you are on your way to become part of that 1% in the Philippines who invest in the stock market.

Stock market investing is simple. Contrary to common belief that it is just available for the very wealthy, nowadays you can open a stock market investment account for a minimum of 5,000 pesos. As you cannot go to the exchange center to do the buying and selling unless you are a licensed broker, you need to find a good broker to do the buying and selling for you. Personally, I recommend Citiseconline.com. I have an account with them. Check their website www.citiseconline.com. They offer free stock market investing seminars. They will teach you the fundamentals. The learning alone will be a good return on investment.

After opening an account with them, let me know and I will tell you the best companies to buy. I suggest that you open an account the soonest. Don't wait any longer. Take advantage of this momentum. Why? Because there will be no perfect timing. One of the critical factors to consider in investing is the time horizon and compound interest. I will write a blog about this so I suggest you subscribe to my blog account at http://investingphilippines.blogspot.com so you would be the first one to learn the advantage of investing early in life.

In principle, what I am advocating is having an insurance first to secure your family in case the monthly cash flow stops. Next is creating an emergency fund equivalent to a minimum of 3 months to maximum of 6 months. After securing all of these, you may start investing in the stock market or mutual funds.

Don't be overwhelmed by the above. You can do it altogether but GRADUALLY. Say, at the end of the month setting aside 10% for insurance, 10% for emergency and 10% for investment. If 10% is difficult, begin with 5% or even 1%. The most important thing is that you are moving forward. Investing is like a full marathon. You don't jump from 3K to 42K. You take baby steps.

So there, please keep in touch and let me know how you are progressing.

God bless.

Regards,

Anselm

To get the latest updates about investing in the stock market and mutual funds, subscribe to my blog by clicking http://investingphilippines.blogspot.com/.

You may also send your questions by emailing me at anselmreyes@yahoo.com

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